UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURUTIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2013
Commission File Number 000-55049
REDSTONE LITERARY AGENTS INC.
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
1842 E Campo Bello Drive
Phoenix, AZ 85022
(Address of principal executive offices, including zip code)
(602) 867-0160
(Telephone number, including area code)
Mary S. Wolf, President
Redstone Literary Agents Inc.
1842 E Campo Bello Drive
Phoenix, AZ 85022
Telephone (602)867-0160 Facsimile (602)865-7313
(Name, address and telephone number of agent for service)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to section 12(g) of the Act:
Common Stock, $.001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act Yes [ ] No [X]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [X] No [ ]
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Non-accelerated filer [ ] Accelerated filer [ ]
Large accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of April 8, 2014, the registrant had 6,000,000 shares of common stock issued
and outstanding. No market value has been computed based upon the fact that no
active trading market had been established as of April 8, 2014.
REDSTONE LITERARY AGENTS, INC.
TABLE OF CONTENTS
Page No.
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Part I
Item 1. Business 3
Item 1A. Risk Factors 7
Item 2. Properties 9
Item 3. Legal Proceedings 9
Item 4. Mine Safety Disclosures 9
Part II
Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities 9
Item 7. Management's Discussion and Analysis of Financial Condition
and Plan of Operation 11
Item 8. Financial Statements 16
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 25
Item 9A. Controls and Procedures 25
Part III
Item 10. Directors and Executive Officers 27
Item 11. Executive Compensation 28
Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters 29
Item 13. Certain Relationships and Related Transactions and
Director Independence 30
Item 14. Principal Accounting Fees and Services 31
Part IV
Item 15. Exhibits 32
Signatures 32
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PART I
FORWARD LOOKING STATEMENTS
This annual report contains forward-looking statements that involve risk and
uncertainties. We use words such as "anticipate", "believe", "plan", "expect",
"future", "intend", and similar expressions to identify such forward-looking
statements. Investors should be aware that all forward-looking statements
contained within this filing are good faith estimates of management as of the
date of this filing. Our actual results could differ materially from those
anticipated in these forward-looking statements for many reasons, including the
risks faced by us as described in the "Risk Factors" section and elsewhere in
this report.
All written forward-looking statements made in connection with this Form 10-K
that are attributable to us, or persons acting on our behalf, are expressly
qualified in their entirety by these cautionary statements. Given the
uncertainties that surround such statements, you are cautioned not to place
undue reliance on such forward-looking statements.
The safe harbors of forward-looking statements provided by the Securities
Litigation Reform Act of 1995 are unavailable to issuers not subject to the
reporting requirements set forth under Section 13(a) or 15(D) of the Securities
Exchange Act of 1934, as amended. As we have not registered our securities
pursuant to Section 12 of the Exchange Act, such safe harbors set forth under
the Reform Act are unavailable to us.
ITEM 1. BUSINESS
GENERAL INFORMATION ABOUT OUR COMPANY
EXECUTIVE SUMMARY
RedStone Literary Agents Inc. ("RLA", "the Company", "we', us" or "our") was
incorporated in Nevada on July 20, 2010 and is considered a development stage
company. At that time Mary Wolf was appointed Chief Executive Officer,
President, Secretary, Chief Financial Officer, Treasurer and Director. The Board
voted to seek capital and begin development of our business plan. We received
our initial funding of $15,000 through the sale of common stock to Mary Wolf who
purchased 3,000,000 shares of our Common Stock at $0.005 per share on July 20,
2010.
During 2011 the Company filed a Registration Statement on Form S-1 with the U.S.
Securities and Exchange Commission to register a total of 3,000,000 shares of
common stock for sale at a fixed price of $0.015 per share. The Registration
Statement was declared effective on January 27, 2012. During the year ended
December 31, 2012 the Company completed the offering for funding of $45,000.
PRINCIPAL PRODUCTS OR SERVICES AND THEIR MARKETS
RLA intends to represent authors to publishers. RLA will negotiate contract
details and provide representation if any part of the book is illegally
reproduced. RLA will be selective about who they will represent, and it is
usually helpful for an author to be referred by people who work in or are
familiar with the publishing industry. It is our intention to first focus in the
genre of health and wellness as we currently have relationships with some
published and unpublished authors in the United States.
NEEDS ASSESSMENT
The process for getting literary work published can be an arduous one for some
authors. For each author under contract we will conduct a "Needs Assessment" to
determine who else may already exist in the category of literature. From there
we will determine the feasibility of making the new title a success. In
addition, sending the completed manuscript to the right publisher is extremely
important. Valuable time can be wasted by sending manuscripts to publishers who
are not publishing in that genre. This is why a proper "Needs Assessment" is
essential. We will determine which publisher is best suited for the manuscript
and which publishers are publishing material that is similar to the author by
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visiting bookstores. Bookstore shelves offer a wealth of information, including
the books the author will be competing against, how popular the genre is, and
which publishers are involved in the market. Similar information can usually be
found online (publishers' websites and online bookstores). It is probably the
most important aspect of the entire process.
BOOK PROPOSAL GUIDELINES
The most important aspect of a manuscript submission to publishers is the book
proposal. The author needs to prepare a carefully detailed and compelling
proposal to convince a publisher that his or her book is worth publishing. The
proposal is valuable in negotiating a good sale by allowing publishers to
evaluate the project quickly and to determine their ability to market the book
successfully. The proposal represents the promise of a book; it must be
distinctive and engaging so that the editor becomes enthusiastic about signing
the project. The difference between a good proposal and an excellent one can
determine whether an offer is received - and can make the difference between a
modest advance and a large one.
Every book is unique, but almost every proposal contains the elements listed
below:
ABOUT THE BOOK
We will prepare a brief (three to five pages) overview and introduction to the
project. This section contains the information that would be used in the jacket
copy, book synopsis and market survey.
We will describe the reasons an author was inspired to write the book and what
makes it valuable. We will be sure to explain what makes the book different from
other, similar books and mention any special features or approaches offered.
The author will give a two or three paragraph synopses of the contents,
illustrating in detail the logic his or her book follows to satisfy its premise.
Addtionally, he or she will explain why he or she as an author is uniquely
qualified to write this book. Included will be relevant experience and
credentials, as well as any supporting professional expertise or publishing
credits.
MARKET & COMPETITION
We will address who is the audience for this book, and why they need to buy this
book, including providing demographic data that reinforces the writer's
hypothesis.
We will address the competition. List each title that would be in direct
competition with the book, along with the author, publisher, and year of
publication. We will explain why the book would be better, or how it fills a
vacant niche in the market.
CHAPTER OUTLINE
We will provide a brief chapter-by-chapter outline of the book. Here we try to
convey both the content and tone of each chapter succinctly. Where possible, we
use quotations, anecdotes and examples to describe the chapters.
SAMPLE CHAPTER
We will include one or two sample chapters, preferably not the introduction or
first chapter, to give the publisher an idea of the writing style and the actual
content of the book.
PUBLISHING DETAILS
We will describe the physical form the Author plans for his/her book.
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Included will be:
* Proposed book length, measured in words
* The number and type of photographs and/or illustrations to be used
* Any special considerations for book size, format, design or layout
* Estimated time the author will need to deliver the completed
manuscript.
ABOUT THE AUTHOR
The author will provide a detailed biography of him or herself, with emphasis on
background experience in the respective field and credentials relevant to his or
her book. If applicable, we will suggest attaching a copy of his or her resume
or curriculum vitae.
The goal for any author who comes to RedStone Literary Agents is to get their
work in front of potential publishing houses for commercialization. In order to
do that certain milestones will have to be achieved to ensure the
marketabilityand appeal for the title is optimized.
1. Conduct Genre Audit: It is imperative to know who has published work on the
topic at hand before. Questions to be asked will focus on geographical regions,
metrics on volume and retail feedback. Additionally, the audit will include what
modalities were used to promote the book online and offline. This process will
be done on a fee for service basis as some genres will require more research
time and analysis.
2. Synopses of current work will have to be edited and put in a marketing
context for procuring potential publishers. This will be done on an hourly fee
with a 25% top up on any fees paid to the editing team.
3. Once work is placed and represented with a publisher, RedStone will take 25%
of the advance fee paid to an author as placement fee.
4. RedStone will also negotiate an allowance to be paid for PR representation to
promote the launch of the book on and offline.
To date two authors have been approached in the lifestyle and wellness category.
Both have self-published work previously and are looking to obtain
representation for current draft manuscripts. These authors have been brought
forward to RedStone through a PR contact that has successfully represented this
genres and her work resulted in best seller placements. Contracts for both
authors are expected to be confirmed by late summer or early fall 2011. We will
also use social media to promote our services for representation on Twitter and
Facebook.
Sample Revenue Model with 3 Authors being represented:
Utilizing an average retail price of each book at $9.95, revenue breakdown would
be:
$1.95 to author
$4.00 to marketing/promotion
$1.00 for printing collateral
$3.00 Net Royalty Fee to RedStone
Selling an average 20,000 Books at $3.00 per copy (Net Royalty Fee) = $60,000
per author
Total Anticipated Revenue to Redstone: $180,000
The revenue numbers are estimates and there is no guarantee that we would be
able to sign 3 authors or that the books would sell at the price and quantity
being quoted due to external factors out of our control.
Management believes we will need to sign a minumum of 4 authors per year to be
profitable. Each contract would be for a period of 18 months, 6 months for the
author to write the book and 12 months for the promotional period. At any given
time we would then have a minimum of 4 to 6 authors under contract.
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DISTRIBUTION METHODS OF THE PRODUCTS OR SERVICES
Once a book has been published it will need a Distributor. If we use an
established publishing house they will already have distribution contacts. If we
choose to self-publish or publish with a very small house that does not have
distribution set up, we will work with the author to make this contact.
Distributors will generally take 55-65% of the cover price (40% of which is
going to the bookseller). We will work with the author to make sure their
pricing formula has taken this into account.
ENGAGING A PR CAMPAIGN:
All Publicists know that the first step to obtaining good publicity is the media
list. Knowing where to mail review copies and having the full contact
information for follow-up calls and letters is vitally important. Many
publishers have a publicity department that will handle this while the book is
on the front list. However, once the next season is published, or we have
self-published the book, the job of getting publicity exposure for the book
falls to the authors themselves. In some cases we may engage a publicist to keep
the interest in relevant markets going.
Once we have our contacts in order, we will have to start writing press releases
and dealing with the media. This is a very different process than that of
writing a book.
STATUS OF ANY PUBLICLY ANNOUNCED NEW PRODUCT OR SERVICE
None.
COMPETITION, COMPETITIVE POSITION IN THE INDUSTRY AND METHODS OF COMPETITION
Getting a literary agent can be the first vital step towards getting published.
Writers who want to become authors are interested in one thing only and that is
writing. They do not want to worry about how or what is involved in the process
that eventually leads to getting their work published and in bookstores for the
masses to engage and enjoy. We believe also that since we have chosen a niche
(health and wellness) that we can be very focused in our submissions and
targeting the right distributor/publisher.
Additionally, non-published writers have a more difficult time getting the
attention of the bigger literary agent as often they already represent an author
in the said genre.
SOURCES AND AVAILABILITY OF RAW MATERIALS AND THE NAMES OF PRINCIPAL SUPPLIERS
We do not rely on any "real" raw materials to speak of as the marketable part of
our work will be the literature which will be representing. We plan to outsource
all of our editing and publicity work to third parties. Currently, we have not
retained editing personnel but we have retained The Marquis Group, LLC as Public
Relations Agent for RLA.
DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS
We feel that, because of the potential wide base of customers for our products,
there will be no problem with dependence on one or few major customers.
PATENTS, TRADEMARKS, LICENSES, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS OR
LABOR CONTRACTS
We currently have no patents or trademarks for our products or brand name;
however, as business is established and operations expand, we may seek such
protection. We act as Agents for our writers and so have limited rights and
access to published work while retained under contract.
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NEED FOR ANY GOVERNMENT APPROVAL OF PRINCIPAL PRODUCTS OR SERVICES
None.
BANKRUPTCY OR SIMILAR PROCEEDINGS
There has been no bankruptcy, receivership or similar proceeding.
REORGANIZATION, PURCHASE OR SALE OF ASSETS
There have been no material reclassifications, mergers, consolidations, or
purchase or sale of a significant amount of assets not in the ordinary course of
business.
EFFECT OF EXISTING OR PROBABLE GOVERNMENTAL REGULATIONS ON THE BUSINESS
None.
RESEARCH AND DEVELOPMENT ACTIVITIES DURING THE LAST TWO YEARS
We have not expended funds for research and development costs since inception.
COSTS AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS
None.
NUMBER OF TOTAL EMPLOYEES AND NUMBER OF FULL TIME EMPLOYEES
We currently have one employee, Ms. Mary Wolf who devotes full time to our
business.
REPORTS TO SECURITIES HOLDERS
We provide an annual report that includes audited financial information to our
shareholders. We also make our financial information equally available to any
interested parties or investors through compliance with the disclosure rules for
a small business issuer under the Securities Exchange Act of 1934. We are
subject to disclosure filing requirements including filing Form 10K annually and
Form 10Q quarterly. In addition, we will file Form 8K and other proxy and
information statements from time to time as required. We do not intend to
voluntarily file the above reports in the event that our obligation to file such
reports is suspended under the Exchange Act. The public may read and copy any
materials that we file with the Securities and Exchange Commission, ("SEC"), at
the SEC's Public Reference Room at 100 F Street NE, Washington, DC 20549. The
public may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site
(http://www.sec.gov) that contains reports, proxy and information statements,
and other information regarding issuers that file electronically with the SEC.
ITEM 1A. RISK FACTORS
An investment in our common stock involves a high degree of risk. You should
carefully consider the risks described below and the other information in this
report before investing in our common stock. If any of the following risks
occur, our business, operating results and financial condition could be
seriously harmed. The trading price of our common stock could decline due to any
of these risks, and you may lose all or part of your investment.
7
RISKS ASSOCIATED WITH OUR BUSINESS
SINCE WE ARE A DEVELOPMENT STAGE COMPANY, HAVE GENERATED LIMITED REVENUES AND
LACK AN OPERATING HISTORY, AN INVESTMENT IN THE SHARES OFFERED HEREIN IS HIGHLY
RISKY AND COULD RESULT IN A COMPLETE LOSS OF YOUR INVESTMENT IF WE ARE
UNSUCCESSFUL IN OUR BUSINESS PLANS.
Our Company was incorporated on July 20, 2010; we have only recently commenced
our business operations; and we have realized only $11,150 in revenues. We have
a limited operating history upon which an evaluation of our future prospects can
be made. Such prospects must be considered in light of the substantial risks,
expenses and difficulties encountered by new entrants into the highly
competitive literary agent industry. Our ability to achieve and maintain
profitability and positive cash flow is highly dependent upon a number of
factors, including our ability to attract and retain writers to represent and
get their work edited and to market for publishing, while keeping costs to a
minimum. Based upon current plans, we expect to incur operating losses in future
periods as we incur significant expenses associated with the initial startup of
our business. Further, we cannot guarantee that we will be successful in
realizing additional revenues or in achieving or sustaining positive cash flow
at any time in the future. Any such failure could result in the possible closure
of our business or force us to seek additional capital through loans or
additional sales of our equity securities to continue business operations, which
would dilute the value of any shares in the company.
WE DO NOT YET HAVE ANY SUBSTANTIAL ASSETS AND ARE DEPENDENT UPON THE PROCEEDS OF
OUR RECENT OFFERING TO FULLY FUND OUR BUSINESS.
The only cash currently available is the cash paid by our founder for the
acquisition of her shares and the funds raised by our recent offering. If we are
unable to continue to generate revenue from operations, there can be no
assurance that we would be able to raise any additional funding to remain in
business. Our auditors have expressed substantial doubt as to our ability to
continue as a going concern.
OUR CONTINUED OPERATIONS DEPEND ON LITERARY TRENDS. IF OUR AUTHORS AND LITERARY
WORKS ARE NOT TRENDING TOPICS PUBLISHING HOUSES ARE LOOKING FOR THIS COULD BE
ADVERSELY AFFECTED.
The proper representation of trending and expert authors important to our
success and competitive position, and the inability to continue to develop and
offer such unique products to our customers could harm our business. We cannot
be certain that any author and his or her topic of literature will be in demand.
In addition, there are no assurances that our future authors will be successful,
and any unsuccessful literary representation could adversely affect our
business.
COMPETITION IN THE LITERARY INDUSTRY IS FIERCE. IF WE CAN NOT SUCCESSFULLY
COMPETE, OUR BUSINESS MAY BE ADVERSELY AFFECTED.
The literary publishing industry is intensely competitive and fragmented. We
compete against a large number of well-established companies with greater
product and name recognition and with substantially greater financial, marketing
and distribution capabilities than ours, as well as against a large number of
small specialty producers. Our competitors include, by way of example, Wiley
Books, Fitzhenry Whiteside, Simon and Schuster and other well known and
respected publishers. There can be no assurance that we can compete successfully
in this complex and changing market. If we can not, our business will be
adversely affected.
BECAUSE OUR SOLE OFFICER AND/OR DIRECTOR HAS NO EXPERIENCE OR BACKGROUND IN
REPRESENTING AUTHORS OR IN THE LITERARY FIELD, THERE IS A HIGHER RISK OUR
BUSINESS WILL FAIL.
Our sole officer and director, Mary S. Wolf, has no experience or background in
representing authors or in the literary field. Her prior business experiences
have primarily been in manufacturing and tax accounting. With no direct training
or experience in the literary field, our management may not be fully aware of
the specific requirements related to working within this industry. Our
management's decisions and choices may not take into account standard procedures
or managerial approaches agents and literary companies commonly use.
Consequently, our operations, earnings, and ultimate financial success could
suffer irreparable harm due to management's lack of experience in this field.
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WE WILL INCUR ONGOING COSTS AND EXPENSES FOR SEC REPORTING AND COMPLIANCE.
WITHOUT CONTINUED REVENUE WE MAY NOT BE ABLE TO REMAIN IN COMPLIANCE, MAKING IT
DIFFICULT FOR INVESTORS TO SELL THEIR SHARES, IF AT ALL.
Our shares are listed for quotation on the OTC Electronic Bulletin Board. To be
eligible for quotation on the OTCBB, issuers must remain current in their
filings with the SEC. In order for us to remain in compliance we will require
future revenues to cover the cost of these filings, which could comprise a
substantial portion of our available cash resources. If we are unable to
generate sufficient revenues to remain in compliance it may be difficult for
investors to resell their shares.
MARY WOLF, A COMPANY DIRECTOR, BENEFICIALLY OWNS 50% OF OUR OUTSTANDING SHARES
OF COMMON STOCK. IF SHE CHOOSES TO SELL HER SHARES IN THE FUTURE IT MAY HAVE AN
ADVERSE EFFECT OF THE PRICE OF OUR STOCK.
Due to the amount of Ms. Wolf's share ownership in our company, if she chooses
to sell her shares in the public market, the market price of our stock could
decrease and all shareholders suffer a dilution of the value of their stock. If
she does sell any of his common stock, she will be subject to Rule 144 under the
1933 Securities Act which will restrict her ability to sell her shares.
ITEM 2. PROPERTIES
We do not currently own any property. We are currently operating out of the
premises of our President on a rent free basis while we are in the
organizational stage. We consider our current principal office space arrangement
adequate and will reassess our needs based upon the future growth of the
Company.
ITEM 3. LEGAL PROCEEDINGS
We are not currently a party to any legal proceedings, and we are not aware of
any pending or potential legal actions.
ITEM 4. MINE SAFETY DISCLOSURE
Not Applicable.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
PENNY STOCK RULES
The Securities and Exchange Commission has also adopted rules that regulate
broker-dealer practices in connection with transactions in penny stocks. Penny
stocks are generally equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the Nasdaq system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system).
A purchaser is purchasing penny stock which limits the ability to sell the
stock. Our shares will remain penny stocks for the foreseeable future. The
classification of penny stock makes it more difficult for a broker-dealer to
sell the stock into a secondary market, which makes it more difficult for a
purchaser to liquidate his/her investment. Any broker-dealer engaged by the
purchaser for the purpose of selling his or her shares in us will be subject to
Rules 15g-1 through 15g-10 of the Securities and Exchange Act. Rather than
creating a need to comply with those rules, some broker-dealers will refuse to
attempt to sell penny stock.
The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, to deliver a standardized risk
disclosure document, which:
a. contains a description of the nature and level of risk in the market
for penny stock in both public offerings and secondary trading;
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b. contains a description of the broker's or dealer's duties to the
customer and of the rights and remedies available to the customer with
respect to a violation of such duties or other requirements of the
Securities Act of 1934, as amended;
c. contains a brief, clear, narrative description of a dealer market,
including "bid" and "ask" price for the penny stock and the
significance of the spread between the bid and ask price;
d. contains a toll-free telephone number for inquiries on disciplinary
actions;
e. defines significant terms in the disclosure document or in the conduct
of trading penny stocks; and
f. contains such other information and is in such form (including
language, type, size and format) as the Securities and Exchange
Commission shall require by rule or regulation;
The broker-dealer also must provide, prior to effecting any transaction in a
penny stock, to the customer:
a. the bid and offer quotations for the penny stock;
b. the compensation of the broker-dealer and its salesperson in the
transaction;
c. the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the
market for such stock; and
d. monthly account statements showing the market value of each penny
stock held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements will have the effect of reducing the trading
activity in the secondary market for our stock because it will be subject to
these penny stock rules. Therefore, stockholders may have difficulty selling
their securities.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
We do not have any equity compensation plans.
SECTION 16(a)
Based solely upon a review of Form 3 and 4 furnished by us under Rule 16a-3(d)
of the Securities Exchange Act of 1934, we are not aware of any individual who
failed to file a required report on a timely basis required by Section 16(a) of
the Securities Exchange Act of 1934.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
There were no purchases of shares of our common stock by us or any affiliated
purchasers during the year ended December 31, 2013.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
TWELVE MONTHS ENDED DECEMBER 31, 2013 COMPARED TO THE TWELVE MONTHS ENDED
DECEMBER 31, 2012
REVENUE
We generated no sales in the twelve months ended December 31, 2013 (2012 -
$11,150) reflecting the fact that we are a development stage business.
GENERAL AND ADMINISTRATIVE EXPENSES
We incurred operating expenses of $18,590 and $24,442 for the years ended
December 31, 2013 and 2012, respectively. These expenses consisted principally
of professional, consulting and filing fees.
LOSSES
We incurred losses of $18,590 and $13, 292 for the twelve month periods ended
December 31, 2013 and 2012, respectively, due to the factors discussed above.
LIQUIDITY AND CAPITAL RESOURCES
The following table provides selected financial data about our Company as at
December 31, 2013 and 2012.
Balance Sheet Data: 12/31/13 12/31/12
------------------- -------- --------
Cash $23,665 $41,789
Total assets $23,665 $41,789
Total liabilities $ 9,627 $ 9,161
Shareholders' equity $14,038 $32,628
Our auditors have expressed their doubt about our ability to continue as a going
concern unless we are able to generate profitable operations.
Management believes that the current cash is sufficient to fund operations for
the next twelve months. Our director has verbally agreed to advance funds as
needed. While she has agreed to advance the funds, the agreement is verbal and
is unenforceable as a matter of law.
We currently have no plans to hire additional employees in the next twelve
months unless sales are sufficient to cover the cost.
CASH FLOW FOR TWELVE MONTHS ENDED DECEMBER 31, 2013 COMPARED TO THE TWELVE
MONTHS ENDED DECEMBER 31, 2012
OPERATING ACTIVITIES
During the twelve months ended December 31, 2013 we used $18,124 in operating
activities compared to $13,131 during the twelve months ended December 31, 2012.
The movement in operating cash used between the two periods is broadly in line
with movement in loss incurred by the Company between the two periods.
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INVESTING ACTIVITIES
The Company neither used, nor generated, funds from investing activities during
the twelve months ended December 31, 2013 or 2012.
FINANCING ACTIVITIES
During the twelve months ended December 31, 2013 we generated $0 from financing
activities, compared to $54,000 during the twelve months ended December 31,
2012. During the twelve months ended December 31, 2012 we received $50,000 from
the sale of shares of our common stock and $4,000 by way of a loan from a
related party.
PLAN OF OPERATION
The milestones for the twelve months following funding are:
FIRST QUARTER - JANUARY - MARCH 2013
We produced and executed contracts with the two authors who have asked us to
work with them in editing book outlines and direct the creation of manuscripts
in order to commercialize a publishing contract. We completed and set up a
social media account for RedStone Literary Agents LLC on Twitter.
Clients First was already working with a Publisher but asked that we provided
publishing support for advance copies to secure the New York Bestseller listing
at launch which was October 2012. It did in fact reach the best seller list.
Social media accounts were also created for the book in order to secure more
awareness for post launch efforts.
The second contract also had a Publisher but requested media relations support
and social media support for the author in Canada and USA. The Alzheimer's
Prevention Cookbook and a website for Marwansabbaghmd.com was created to assist
in the procurement of media and social media postings. Twitter was also created
for him and is currently being maintained by a consultant we hired to assist us
who has public relations and social media experience in both countries.
Author bios were completed as well as headshots and chapter outlines for each
author. The Website for the company is on hold until more authors are secured
for promotion. Social media seems to be a very effective tool to promote these
authors and increase sales of books. That said, it is a strategy we would like
to continue pursuing. We will also secured a freelance editor to work with each
author to complete chapter outlines and synopsis of book.
In addition, began researching literary shows to attend in order to bid
publishing deals. These shows will also serve as a vehicle to secure additional
representation of other up and coming authors. We will investigate industry
groups to subscribe to like the Association of Authors Representatives Inc. We
hired a Publicist to give Authors advance promotion and she is also as stated
above assisting with social media awareness. If resources are available, it
would be strategic to attend Book Expo America in New York (May 23-26). We
believe the Book Expo will show us the leading genres that book publishers are
currently sourcing. As well, other agents will be looking for some other
regional agents to assist with PR and also speaking engagements for new
releases. If funding is not available we will find another similar trade show to
attend later in the year.
SECOND QUARTER - APRIL - JUNE 2013
Resources have been limited to hire a part time assistant who would be
responsible for many aspects of our operation, from administration to book title
procurement. A book selling strategy is being explored to find the right
publisher in order to negotiate successful publishing deals. may involve editing
its content and HTML and associated coding to both increase its relevance to
specific keywords and to remove barriers to the indexing activities of search
engines.
If an author is looking for a literary agent it is likely that they will either
look for this via contacts in the industry or through conducting a search on the
internet. A SEO campaign would assist RedStone in attracting incremental
business.
12
THIRD QUARTER - JULY - SEPTEMBER 2013
We will engage in a search engine optimization campaign to assist us with
awareness for our authors. Search engine optimization (SEO) is the process of
improving the visibility of a website or a web page in search engines via the
"natural" or un-paid search results. In general, the earlier (or higher on the
page), and more frequently a site appears in the search results list, the more
visitors it will receive from the search engine's users. As an Internet
marketing strategy, SEO considers how search engines work, what people search
for, the actual search terms typed into search engines and which search engines
are preferred by their targeted audience. Optimizing a website for author
procurement. A content write will be secured.
We are going to be actively looking for authors to procure literary
representation.
FOURTH QUARTER - OCTOBER - DECEMBER 2013
Meetings took place with a few members of the medical community to procure
additional authors. We continued to communicate with various potential authors
via phone and by meeting in person. This effort is necessary as the economy
seems to have picked up in various areas. As we procure more authors the process
of going from outlines, edit and manuscript rotate with networking and PR
support. "Dr. XYZ will be having a seminar at location AA and it is open to the
public." Typically speaking events result in increased awareness and incremental
book sales. Books would also be on sale at the seminar.
FIRST QUARTER - JANUARY - MARCH 2014
Our PR representative is continuing to meet with physicians to procure first
time author opportunities. The company also assisted a concierge medical group
with some publishing opportunities. We are meeting with another large medical
group in New York in the middle of March to talk about how we can assist them
with publishing opportunities for their new division which will require some
copywriting, publishing and media communications.
SECOND QUARTER - APRIL - JUNE 2014
If the above contract is secured then this will assist the company with cash
flow and give more exposure to our copywriting and publishing experience. We are
also proposing to assist the medical community with copywriting for their on and
offline domains to create e-zines that are a few to 125 pages.
Our continued operations depend on literary trends. If our authors and literary
works are not trending topics publishing houses are looking for this could
adversely affect our business. The proper representation of trending and expert
authors important to our success and competitive position, and the inability to
continue to develop and offer such unique products to our customers could harm
our business. We cannot be certain that any author and his or her topic of
literature will be in demand. In addition, there are no assurances that our
future authors will be successful, and any unsuccessful literary representation
could adversely affect our business.
Competition in the literary industry is fierce. If we cannot successfully
compete, our business may be adversely affected. If we are able to establish our
business we will compete against a large number of well-established companies
with greater product and name recognition and with substantially greater
financial, marketing and distribution capabilities than ours, as well as against
a large number of small specialty producers. There can be no assurance that we
can compete successfully in this complex and changing market.
CURRENT MARKET TRENDS
Management believes E-Books are becoming a larger and larger revenue stream for
book publishers. Without a doubt, the e-book is the biggest thing that's hit the
publishing industry since the invention of movable type. Publishers and e-book
resellers are reporting strong growth. In 2010 year, the publishers surveyed by
the Association of American Publishers saw 8.3 percent of domestic net sales
from e-books. Three months into 2011, Simon and Schuster's e-book sales had
climbed to 17 percent of revenue; at Hachette, parent company of Little, Brown,
the figure was 22 percent. From November to May, according to a Pew Internet
Project study, the percentage of American adults with a dedicated e-reader (like
a Nook or Kindle) leaped from 6 percent to 12 percent. Another 8 percent now
13
have tablets. To add a little context, fewer than half of Americans even buy a
book in a typical year. So for 12 percent of all Americans to have an e-reader
is not trivial.
Meanwhile, print sales are down about 25 percent. Physical bookstores, including
the Borders chain, which is in bankruptcy reorganization, are on the rocks,
rapidly adding stationery sections and ticketed author events to make up for
plummeting book sales. And Amazon, which offers books in every possible format
but is heavily promoting its proprietary Kindle device, announced in January
2011 that it is now selling more copies digitally than in paperback.
USA TODAY added e-book bestsellers to its list in July 2009. The USA TODAY list
differs from the Times list in that it is a single list including hardcover and
paperback, e-books, fiction and nonfiction, and all genres in one list. (It also
does not exclude "evergreen" titles.") "The aim of the list is to tell our
readers what the ranking of titles was in a particular week," says Anthony
DeBarros, USA TODAY's Senior Database Editor. If a title is released in
hardcover and is published six months later in paperback and e-formats, "we take
the sales of all those formats and put them together so that a book's rank is
determined by a combination of sales for e-books and whatever print format it's
selling in. For some titles, we track several different ISBNs and put those all
together." The list does note which format was the bestselling for that week.
We will be focusing on e-books as they are relatively inexpensive to get to
market and in the hands of readers than paperbacks or hard cover. We will market
by sending chapters to book reviewers and also build a database of customers for
the launch of each book title. Management believes e-books will only get more
inexpensive (relative to hardcover) as there is so much content going digital
that any barriers to entry are being minimized or eliminated. We believe the key
will be to secure engaging authors in the growing segments in self-help,
alternative medicine and new age health.
FUTURE TRENDS TO WATCH
1. Enhanced E-Books Are Coming and Will Only Get Better
Consumers have already shown that they love e-books for their convenience and
accessibility, but ultimately most e-books today are the same as print, just in
digital form. The e-book of the not-too-distant future will be much more than
text. Interactivity has arrived and will change the nature of the e-book.
Whether a consumer's choice is Kindle or iPad, Management believes the war of
devices soon will not matter as many will have the same titles to offer
consumers for sale and enjoyment. Management believes the real opportunity for
publishers will be to develop e-books that offer interactive features. We
believe customers will demand interactive books that provide a much better, more
informed and enriching experience. For them, the experience (not the cost) is
often the primary driver.
2. The Contextual Upsell Will be a Business Model to Watch
E-books allow publishers to interact with their customers in new ways. For
example a customer is trying to learn statistics and gets stuck on a particular
formula. They ask friends but no one can explain it well. They're stuck. They
click a help button, which points them to the publisher site where they can
download relevant tutorials about specific formulas for $2.99. They choose the
one they need and get a new learning tool, which helps them progress in their
class. Multiply this by hundreds of thousands of students who share similar
learning gaps who will purchase through the book ("in-book app purchase") and it
becomes a new marketing opportunity.
3. Publishers Will Be More Important Than Ever
Despite the hype around self-publishing via the web, we believe publishing
houses will play an even greater role in an e-book world. Commodity content is
everywhere (and largely free), so high-quality vetted, edited content -- which
takes a staff of experts -- will be worth a premium.
14
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors.
LIMITED OPERATING HISTORY; NEED FOR ADDITIONAL CAPITAL
There is no historical financial information about us on which to base an
evaluation of our performance. We are a development stage company and have not
generated revenues from operations. We cannot guarantee we will be successful in
our business operations. Our business is subject to risks inherent in the
establishment of a new business enterprise, including limited capital resources,
possible delays in implementing our business plan, and possible cost overruns
due to increases in the cost of services.
To become profitable and competitive, we must implement our business plan and
generate revenue. We believe that our current funds will allow us to operate for
one year.
15
ITEM 8. FINANCIAL STATEMENTS
[LETTERHEAD OF CUTLER & CO., LLC]
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
1842 E Campo Bello Drive
Phoenix, AZ 85022
We have audited the accompanying balance sheets of Redstone Literary Agents,
Inc. as of December 31, 2013 and the related statement of operations, changes in
stockholders' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The financial statements as of December 31, 2012 and for the year
ended December 31, 2012 and the period from July 20, 2010 (Inception) to
December 31, 2012 were audited by another auditor who expressed an unqualified
opinion on February 11, 2013.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Redwood Literary Agents, Inc.
as of December 31, 2013, and the results of its operations and its cash flows
for the year then ended in conformity with accounting principles generally
accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements the Company has suffered losses from operations since
Inception (July 20, 2010) and currently does not have sufficient available
funding to fully implement its business plan. These factors raise substantial
doubt about its ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 1. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
/s/ Cutler & Co., LLC
Arvada, Colorado ---------------------------------
March 28, 2014
16
RONALD R. CHADWICK, P.C.
Certified Public Accountant
2851 South Parker Road, Suite 720
Aurora, Colorado 80014
Telephone (303)306-1967
Fax (303)306-1944
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Redstone Literary Agents, Inc.
Phoenix, Arizona
I have audited the accompanying balance sheet of Redstone Literary Agents, Inc.
(a development stage company) as of December 31, 2012, and the related
statements of operations, stockholders' equity and cash flows for the year ended
December 31, 2012, and for the period from July 20, 2010 (inception) through
December 31, 2012. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that I plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Redstone Literary Agents, Inc. as
of December 31, 2012, and the results of its operations and its cash flows for
the year ended December 31, 2012, and for the period from July 20, 2010
(inception) through December 31, 2012 in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements the Company has suffered a loss from operations and has
limited working capital that raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Aurora, Colorado /s/ Ronald R. Chadwick, P.C.
February 11, 2013 ------------------------------------
RONALD R. CHADWICK, P.C.
17
Redstone Literary Agents, Inc.
(A Development Stage Company)
Balance Sheets
(Audited)
--------------------------------------------------------------------------------
December 31, December 31,
2013 2012
-------- --------
ASSETS
CURRENT ASSETS
Cash & Cash Equivalents $ 23,665 $ 41,789
-------- --------
TOTAL ASSETS $ 23,665 $ 41,789
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 100 $ --
Loans from related party 9,527 9,161
-------- --------
TOTAL LIABILITIES 9,627 9,161
-------- --------
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value, 75,000,000 shares authorized;
6,000,000 shares issued and outstanding: 6,000 6,000
Additional paid-in-capital 54,000 54,000
Deficit accumulated during the development stage (45,962) (27,372)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 14,038 32,628
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 23,665 $ 41,789
======== ========
The accompanying notes are an integral part of these financial statements.
18
Redstone Literary Agents, Inc.
(A Development Stage Company)
Statement of Operations
(Audited)
--------------------------------------------------------------------------------
For the Period
from Inception
Year Ended Year Ended (July 20, 2010) to
December 31, December 31, December 31,
2013 2012 2013
---------- ---------- ----------
SALES $ -- $ 11,150 $ 11,150
GENERAL AND ADMINISTRATIVE EXPENSES
Bank charges and interest 570 376 1,299
Consulting fees 1,200 11,180 12,380
Professional fees 7,750 9,250 25,200
Filing and transfer fees 8,656 -- 8,656
Office expenses 414 3,636 9,577
---------- ---------- ----------
Total general and administrative expenses 18,590 24,442 57,112
---------- ---------- ----------
Net loss from operations (18,590) (13,292) (45,962)
Provision for taxes -- -- --
---------- ---------- ----------
Net loss $ (18,590) $ (13,292) $ (45,962)
========== ========== ==========
LOSS PER COMMON SHARE - BASIC AND DILUTED $ (0.00)* $ (0.00)*
========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING BASIC AND DILUTED 6,000,000 4,875,000
========== ==========
----------
* denotes a loss of less than $(0.01) per share,
The accompanying notes are an integral part of these financial statements.
19
Redstone Literary Agents, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
(Audited)
--------------------------------------------------------------------------------
Deficit
Accumulated
Additional During the Total
Common Paid-in Total Development Stockholders'
Shares Par Value Capital Capital Stage Equity
------ --------- ------- ------- ----- ------
Subscribed for cash at $.05 3,000,000 $ 3,000 $ 12,000 $ 15,000 $ -- $ 15,000
on July 20, 2010
Share subscription receivable -- -- -- (5,000) -- (5,000)
Net loss -- -- -- -- (770) (770)
--------- -------- ----------- --------- --------- ---------
BALANCE, DECEMBER 31, 2010 3,000,000 3,000 12,000 10,000 (770) 9,230
Net loss -- -- -- -- (13,310) (13,310)
--------- -------- ----------- --------- --------- ---------
BALANCE, DECEMBER 31, 2011 3,000,000 3,000 12,000 10,000 (14,080) (4,080)
Subscribed for cash at $.015
on January 27, 2012 3,000,000 3,000 (2,955,000) 45,000 -- 45,000
Share subscription received -- -- -- 5,000 -- 5,000
Net loss -- -- -- -- (13,292) (13,292)
--------- -------- ----------- --------- --------- ---------
BALANCE, DECEMBER 31, 2012 6,000,000 6,000 54,000 60,000 (27,372) 32,628
Net loss -- -- -- -- (18,590) (18,590)
--------- -------- ----------- --------- --------- ---------
BALANCE, DECEMBER 31, 2013 6,000,000 $ 6,000 $ 54,000 $ 60,000 $ (45,962) $ 14,038
========= ======== =========== ========= ========= =========
The accompanying notes are an integral part of these financial statements.
20
Redstone Literary Agents, Inc.
(A Development Stage Company)
Statements of Cash Flows
(Audited)
--------------------------------------------------------------------------------
For the Period
from Inception
Year Ended Year Ended (July 20, 2010) to
December 31, December 31, December 31,
2013 2012 2013
-------- -------- --------
CASH DERIVED FROM (USED FOR) OPERATING ACTIVITIES
Net loss for the period $(18,590) $(13,292) $(45,962)
Adjustments to reconcile net loss to net
cash Provided by (used in) operating activities
Changes in operating assets and liabilities
Accrued Expenses 366 161 527
Accounts payable 100 -- 100
-------- -------- --------
Net cash (used in) operating activities (18,124) (13,131) (45,335)
INVESTING ACTIVITIES -- -- --
-------- -------- --------
Net cash used for investing activities -- -- --
FINANCING ACTIVITIES
Loans from related party -- 4,000 9,000
Shares subscribed for cash -- 50,000 60,000
-------- -------- --------
Net cash provided by financing activities -- 54,000 69,000
Cash increase during the period (18,124) 40,869 23,665
Cash beginning of the period 41,789 920 --
-------- -------- --------
Cash end of the period $ 23,665 $ 41,789 $ 23,665
======== ======== ========
The accompanying notes are an integral part of these financial statements.
21
Redstone Literary Agents, Inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2013
--------------------------------------------------------------------------------
1. NATURE AND CONTINUANCE OF OPERATIONS
Redstone Literary Agents, Inc. ("the Company") was incorporated under the laws
of State of Nevada, U.S. on July 20, 2010, with an authorized capital of
75,000,000 common shares with a par value of $0.001. The Company's year end is
the end of December. The Company is in the development stage of its publishing
service business. During the period ended December 31, 2010, the Company
commenced operations by issuing shares.
Going Concern
These financial statements have been prepared on a going concern basis which
assumes the Company will be able to realize its assets and discharge its
liabilities in the normal course of business for the foreseeable future. The
Company has incurred losses since inception resulting in an accumulated deficit
of $45,962 as at December 31, 2013 and further losses are anticipated in the
development of its business raising substantial doubt about the Company's
ability to continue as a going concern. The ability to continue as a going
concern is dependent upon the Company generating profitable operations in the
future and/or to obtain the necessary financing to meet its obligations and
repay its liabilities arising from normal business operations when they come
due. Management intends to finance operating costs over the next twelve months
with existing cash on hand and loans from directors and or private placement of
common stock.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements of the Company have been prepared in accordance with
generally accepted accounting principles in the United States of America and are
presented in US dollars.
Development Stage Company
The Company is a development stage company in accordance with Financial
Accounting Standards Codification ("ASC") 915 "DEVELOPMENT STAGE ENTITIES".
Among the disclosures required as a development stage company are that our
financial statements are identified as those of a development stage company, and
that the statements of operations, stockholders' deficit and cash flows disclose
activity since the date of our Inception (July 20, 2010) as a development stage
company.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the period. Actual results
could differ from those estimates.
The carrying value of cash and accounts payable and accrued liabilities
approximates their fair value because of the short maturity of these
instruments. Unless otherwise noted, it is management's opinion the Company is
not exposed to significant interest, currency or credit risks arising from these
financial instruments.
Income Taxes
The Company follows the liability method of accounting for income taxes. Under
this method, deferred income tax assets and liabilities are recognized for the
estimated tax consequences attributable to differences between the financial
statement carrying values and their respective income tax basis (temporary
differences). The effect on deferred income tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
22
At December 31, 2013, a full deferred tax asset valuation allowance has been
provided and no deferred tax asset has been recorded.
Earning Per Share
The Company computes loss per share in accordance with ASC 105, "Earnings per
Share" which requires presentation of both basic and diluted earnings per share
on the face of the statement of operations. Basic loss per share is computed by
dividing net loss available to common shareholders by the weighted average
number of outstanding common shares during the period. Diluted loss per share
gives effect to all dilutive potential common shares outstanding during the
period. Dilutive loss per share excludes all potential common shares if their
effect is anti-dilutive.
The Company has no potential dilutive instruments and accordingly basic loss and
diluted loss per share are equal.
Stock-based Compensation
The Company accounts for employee and non-employee stock awards under ASC 718,
whereby equity instruments issued to employees for services are recorded based
on the fair value of the instrument issued and those issued to non-employees are
recorded based on the fair value of the consideration received or the fair value
of the equity instrument, whichever is more reliably measurable.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly
liquid instruments purchased with an original maturity of three months or less
to be cash equivalents.
Dividends
The Company has not adopted any policy regarding payment of dividends. No
dividends have been paid during any of the periods shown.
Impairment of Long-Lived Assets
The Company, when applicable, continually monitors events and changes in
circumstances that could indicate carrying amounts of long-lived assets may not
be recoverable. When such events or changes in circumstances are present, the
Company assesses the recoverability of long-lived assets by determining whether
the carrying value of such assets will be recovered through undiscounted
expected future cash flows. If the total of the future cash flows is less than
the carrying amount of those assets, the Company recognizes an impairment loss
based on the excess of the carrying amount over the fair value of the assets.
Assets to be disposed of are reported at the lower of the carrying amount or the
fair value less costs to sell.
Financial Instruments
Fair value measurements are determined based on the assumptions that market
participants would use in pricing an asset or liability. Accounting Standards
Codification ("ASC") 820-10 establishes a hierarchy for inputs used in measuring
fair value that maximizes the use of observable inputs and minimizes the use of
unobservable inputs by requiring that the most observable inputs be used when
available. ASC 820 establishes a fair value hierarchy that prioritizes the use
of inputs used in valuation methodologies into the following three levels:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in
active markets. A quoted price in an active market provides the most reliable
evidence of fair value and must be used to measure fair value whenever
available.
Level 2: Significant other observable inputs other than Level 1 prices such as
quoted prices for similar assets or liabilities; quoted prices in markets that
are not active; or other inputs that are observable or can be corroborated by
observable market data.
Level 3: Significant unobservable inputs which reflect a reporting entity's own
assumptions about the assumptions that market participants would use for pricing
an asset or liability. For example, level 3 inputs would relate to forecasts of
future earnings and cash flows used in a discounted future cash flows method.
23
The recorded amounts of financial instruments, including cash equivalents and
accounts payable, approximate their market values as of December 31, 2013.
Recent accounting pronouncements
We have reviewed all the recently issued, but not yet effective, accounting
pronouncements and we do not believe that the future adoption of any such
pronouncements may be expected to cause a material impact on our financial
condition or the results of our operations.
Reclassifications
Certain amounts previously presented for prior periods have been reclassified.
The reclassifications had no effect on net loss, total assets, or total
shareholders' equity.
3. COMMON STOCK
The total number of common shares authorized that may be issued by the Company
is 75,000,000 shares with a par value of one tenth of one cent ($0.001) per
share and no other class of shares is authorized.
As of December 31, 2013, the Company has issued 6,000,000 shares of common stock
for total cash proceeds of $60,000. At December 31, 2013 there were no
outstanding stock options or warrants.
4. INCOME TAXES
As of December 31, 2013, the Company had net operating loss carry forwards of
approximately $45,962 that may be available to reduce future years' taxable
income through 2030. Future tax benefits which may arise as a result of these
losses have not been recognized in these financial statements, as their
realization is determined not likely to occur and accordingly, the Company has
recorded a valuation allowance for the deferred tax asset relating to these tax
loss carry-forwards.
5. RELATED PARTY TRANSACTIONS
In support of the Company's efforts and cash requirements, it may rely on
advances from related parties until such time that the Company can support its
operations or attains adequate financing through sales of its equity or
traditional debt financing. There is no formal written commitment for continued
support by shareholders. Amounts represent advances or amounts paid in
satisfaction of liabilities. The advances are considered temporary in nature and
have not been formalized by a promissory note.
As of December 31, 2013, the Company had a loan outstanding with the Company's
shareholder in the amount of $9,527 of which $9,000 was principal and $527
interest. The loan bears interest at 4% per annum, is due on demand and is
unsecured.
6. SUBSEQUENT EVENT
In accordance with ASC 855-10, "Subsequent Events" the Company has analyzed its
operations subsequent to December 31, 2013 to the date these financial
statements were available to be issued on April 8, 2014, and has determined
that it does not have any material subsequent events to disclose in these
financial statements.
24
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON FINANCIAL DISCLOSURE
CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
On November 30, 2013, Redstone Literary Agents Inc. (the "Registrant") was
informed by Ronald Chadwick, P.C. ("Ronald Chadwick") that it was terminating
its services as the Registrant's independent registered public accounting firm.
On January 30, 2014, the Registrant retained Cutler & Co., LLC ("Cutler & Co.")
as its principal independent accountants.
We had no disagreements with either Ronald Chadwick or Cutler & Co. with respect
to financial disclosure.
ITEM 9A. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Management maintains "disclosure controls and procedures," as such term is
defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the
"Exchange Act"), that are designed to ensure that information required to be
disclosed in our Exchange Act reports is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission rules and forms, and that such information is accumulated and
communicated to management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure.
In connection with the preparation of this annual report on Form 10-K, an
evaluation was carried out by management, with the participation of the Chief
Executive Officer and the Chief Financial Officer, of the effectiveness of our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Exchange Act) as of December 31, 2013.
Based on that evaluation, management concluded, as of the end of the period
covered by this report, that our disclosure controls and procedures were
effective such that the material information required to be included in our
Securities and Exchange Commission reports is accumulated and communicated to
our management, including our principal executive and financial officer,
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms relating to our company,
particularly during the period when this report was being prepared.
MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act, for the Company.
Internal control over financial reporting includes those policies and procedures
that: (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of our assets;
(2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that our receipts and expenditures are being made
only in accordance with authorizations of its management and directors; and (3)
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have a
material effect on the financial statements.
Management recognizes that there are inherent limitations in the effectiveness
of any system of internal control, and accordingly, even effective internal
control can provide only reasonable assurance with respect to financial
statement preparation and may not prevent or detect material misstatements. In
addition, effective internal control at a point in time may become ineffective
in future periods because of changes in conditions or due to deterioration in
the degree of compliance with our established policies and procedures.
25
A material weakness is a significant deficiency, or combination of significant
deficiencies, that results in there being a more than remote likelihood that a
material misstatement of the annual or interim financial statements will not be
prevented or detected.
Under the supervision and with the participation of our Chief Executive Officer
and Chief Financial Officer, management conducted an evaluation of the
effectiveness of our internal control over financial reporting, as of the
Evaluation Date, based on the framework set forth in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). Based on its evaluation under this framework, management
concluded that our internal control over financial reporting was not effective
as of the Evaluation Date.
Management assessed the effectiveness of the Company's internal control over
financial reporting as of Evaluation Date and identified the following material
weaknesses:
INSUFFICIENT RESOURCES: We have an inadequate number of personnel with requisite
expertise in the key functional areas of finance and accounting.
INADEQUATE SEGREGATION OF DUTIES: We have an inadequate number of personnel to
properly implement control procedures.
LACK OF AUDIT COMMITTEE & OUTSIDE DIRECTORS ON THE COMPANY'S BOARD OF DIRECTORS:
We do not have a functioning audit committee or outside directors on the
Company's Board of Directors, resulting in ineffective oversight in the
establishment and monitoring of required internal controls and procedures.
Management is committed to improving its internal controls and will (1) continue
to use third party specialists to address shortfalls in staffing and to assist
the Company with accounting and finance responsibilities, (2) increase the
frequency of independent reconciliations of significant accounts which will
mitigate the lack of segregation of duties until there are sufficient personnel
and (3) may consider appointing outside directors and audit committee members in
the future.
Due to the nature of this material weakness, there is a more than remote
likelihood that misstatements which could be material to the annual or interim
financial statements could occur that would not be prevented or detected.
This Annual Report does not include an attestation report of our registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the our registered public
accounting firm pursuant to temporary rules of the SEC that permit us to provide
only management's report in this annual report.
CHANGES IN INTERNAL CONTROLS
As of the end of the period covered by this report, there have been no changes
in Redstone Literary Agents' internal controls over financial reporting during
the year ended December 31, 2013, that materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting
subsequent to the date of management's last evaluation.
26
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
The name, age and title of our executive officers and directors are as follows:
Name and Address of Executive
Officer and/or Director Age Position
----------------------- --- --------
Mary Wolf 54 CEO, President, Secretary, CFO,
1842 E Campo Bello Drive Treasurer and Director
Phoenix, AZ 85022
The person named is the promoter of the company, as that term is defined in the
rules and regulations promulgated under the Securities and Exchange Act of 1933.
The person named above has served in the positions stated above from inception
until present.
TERM OF OFFICE
Directors are appointed to hold office until the next annual meeting of our
stockholders or until a successor is elected and qualified, or until resignation
or removal in accordance with the provisions of the Company by-laws or Nevada
corporate law. Officers are appointed by our Board of Directors and holds office
until removed by the Board. The Board of Directors has no nominating, auditing
or compensation committees.
SIGNIFICANT EMPLOYEES
We currently have one employee, Mary Wolf. Ms. Wolf currently devotes full time
to our business and is responsible for our general strategy and fund raising.
No officer, director, or persons nominated for such positions, promoter or
significant employee has been involved in the last ten years in any of the
following:
* Any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either at the time
of the bankruptcy or within two years prior to that time,
* Any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses),
* Being subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of
business, securities or banking activities,
* Being found by a court of competent jurisdiction (in a civil action),
the Commission or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended, or vacated.
* Having any government agency, administrative agency, or administrative
court impose an administrative finding, order, decree, or sanction
against them as a result of their involvement in any type of business,
securities, or banking activity.
* Being the subject of a pending administrative proceeding related to
their involvement in any type of business, securities, or banking
activity.
* Having any administrative proceeding been threatened against you
related to their involvement in any type of business, securities, or
banking activity.
27
BACKGROUND INFORMATION ABOUT OUR OFFICER AND DIRECTOR
Mary S. Wolf, EA has been President, CEO and Chairman of the Board of Directors
of the Company since inception. From January 1998 to present she has owned and
operated a Tax Accounting business, Mary S. Wolf, EA, Phoenix, Arizona. On
August 9th, 1995 she received her Enrolled Agent Certificate which allows her to
practice before the Internal Revenue Service. An Enrolled Agent (EA) is a tax
professional who has passed an IRS test covering all aspects of taxation, plus
passed an IRS background check. Enrolled Agents have passed a two-day, 8-hour
examination. The examination covers all aspects of federal tax law, including
the taxation of individuals, corporations, partnerships, and various regulations
governing IRS collections and audit procedures. Like CPAs and tax attorneys, EAs
can handle any type of tax matter and represent their client's interests before
the IRS. Unlike CPAs and tax attorneys, Enrolled Agents are tested directly by
the IRS, and enrolled agents focus exclusively on tax accounting. From January
1990 to April 1997 Ms. Wolf worked for H&R Block preparing tax returns for their
Phoenix, Arizona personal and business district offices. From June 1987 through
December 1989, she was employed by Syntellect, Inc., Phoenix, Arizona, a voice
response hardware manufacturer as an installer of their software domestically
and internationally. Prior to June of 1987 she was a controller for a
multi-company group that computerized equipment for manufacturers, sold all
types of metal and woodworking machinery , and developed specialized machinery
for businesses, Quality Machine Tools, Inc., Quantum Machine Services, Inc. and
Falcon Manufacturing, Inc.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and
executive officers, and persons who own more than ten percent of our common
stock, to file with the Securities and Exchange Commission initial reports of
ownership and reports of changes of ownership of our common stock. Officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish us with copies of all Section 16(a) forms they file.
We intend to ensure to the best of our ability that all Section 16(a) filing
requirements applicable to our officers, directors and greater than ten percent
beneficial owners are complied with in a timely fashion.
CODE OF ETHICS
We do not currently have a code of ethics, because we have only limited business
operations and only one officer and director, we believe a code of ethics would
have limited utility. We intend to adopt such a code of ethics as our business
operations expand and we have more directors, officers and employees.
ITEM 11. EXECUTIVE COMPENSATION
Currently our officer and director receives no compensation for her services
during the development stage of our business operations. She is reimbursed for
any out-of-pocket expenses she may incur on our behalf. In the future, we may
approve payment of salaries for officers and directors, but currently, no such
plans have been approved. We do not have any employment agreements in place with
our officer and director. We also do not currently have any benefits, such as
health or life insurance, available to our employee.
SUMMARY COMPENSATION TABLE
Change in
Pension
Value and
Non-Equity Nonqualified
Incentive Deferred All
Name and Plan Compen- Other
Principal Stock Option Compen- sation Compen-
Position Year Salary Bonus Awards Awards sation Earnings sation Totals
------------ ---- ------ ----- ------ ------ ------ -------- ------ ------
Mary Wolf, CEO 2013 0 0 0 0 0 0 0 0
2012 0 0 0 0 0 0 0 0
2011 0 0 0 0 0 0 0 0
28
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
Option Awards Stock Awards
----------------------------------------------------------------- ----------------------------------------------
Equity
Incentive
Equity Plan
Incentive Awards:
Plan Market or
Awards: Payout
Equity Number of Value of
Incentive Number Unearned Unearned
Plan Awards; of Market Shares, Shares,
Number of Number of Number of Shares Value of Units or Units or
Securities Securities Securities or Units Shares or Other Other
Underlying Underlying Underlying of Stock Units of Rights Rights
Unexercised Unexercised Unexercised Option Option That Stock That That That
Options (#) Options (#) Unearned Exercise Expiration Have Not Have Not Have Not Have Not
Name Exercisable Unexercisable Options (#) Price Date Vested(#) Vested Vested Vested
---- ----------- ------------- ----------- ----- ---- --------- ------ ------ ------
Mary Wolf 0 0 0 0 0 0 0 0 0
DIRECTOR COMPENSATION
Change in
Pension
Value and
Fees Non-Equity Nonqualified
Earned Incentive Deferred
Paid in Stock Option Plan Compensation All Other
Name Cash Awards Awards Compensation Earnings Compensation Total
---- ---- ------ ------ ------------ -------- ------------ -----
Mary Wolf 0 0 0 0 0 0 0
On July 20, 2010, a total of 3,000,000 shares of common stock were issued to
Mary Wolf in exchange for cash in the amount of $15,000 or $0.005 per share.
There are no annuity, pension or retirement benefits proposed to be paid to the
officer or director or employees in the event of retirement at normal retirement
date pursuant to any presently existing plan provided or contributed to by the
Company.
COMPENSATION OF DIRECTORS
Directors are permitted to receive fixed fees and other compensation for their
services as directors. The Board of Directors has the authority to fix the
compensation of directors. No amounts have been paid to, or accrued to, our
director in such capacity.
EMPLOYMENT AGREEMENTS
We do not have any employment agreements in place with our sole officer and
director.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the number of
shares of our common stock owned beneficially as of the date of this prospectus
by: (i) each person (including any group) known to us to own more than five
percent (5%) of any class of our voting securities, (ii) our directors, and or
(iii) our officers. Unless otherwise indicated, the stockholder listed possesses
sole voting and investment power with respect to the shares shown.
29
Amount and Nature Percentage
Name and Address of Beneficial of Common
Title of Class of Beneficial Owner Ownership Stock(1)
-------------- ------------------- --------- --------
Common Stock Mary Wolf, CEO 3,000,000 50%
1842 E Campo Bello Drive Direct
Phoenix, AZ 85022
Common Stock Officers and/or directors 3,000,000 50%
as a Group
HOLDERS OF MORE THAN 5% OF OUR COMMON STOCK
N/A
----------
(1) A beneficial owner of a security includes any person who, directly or
indirectly, through any contract, arrangement, understanding, relationship,
or otherwise has or shares: (i) voting power, which includes the power to
vote, or to direct the voting of shares; and (ii) investment power, which
includes the power to dispose or direct the disposition of shares. Certain
shares may be deemed to be beneficially owned by more than one person (if,
for example, persons share the power to vote or the power to dispose of the
shares). In addition, shares are deemed to be beneficially owned by a
person if the person has the right to acquire the shares (for example, upon
exercise of an option) within 60 days of the date as of which the
information is provided. In computing the percentage ownership of any
person, the amount of shares outstanding is deemed to include the amount of
shares beneficially owned by such person (and only such person) by reason
of these acquisition rights. As a result, the percentage of outstanding
shares of any person as shown in this table does not necessarily reflect
the person's actual ownership or voting power with respect to the number of
shares of common stock actually outstanding as of the date of this
prospectus. As of the date of this prospectus, there were 3,000,000 shares
of our common stock issued and outstanding.
FUTURE SALES BY EXISTING STOCKHOLDERS
A total of 3,000,000 shares have been issued to the existing stockholder, all of
which are held by Ms. Wolf, the officer and director of the Company and are
restricted securities, as that term is defined in Rule 144 of the Rules and
Regulations of the SEC promulgated under the Act. Under Rule 144, such shares
can be publicly sold, subject to volume restrictions and certain restrictions on
the manner of sale, commencing six months after their acquisition.
Rule 144(i)(1) states that the Rule 144 safe harbor is not available for the
resale of securities "initially issued" by a shell company (other than a
business combination related shell company) or an issuer that has "at any time
previously" been a shell company (other than a business combination related
shell company). Consequently, the Rule 144 safe harbor is not available for the
resale of such securities unless and until all of the conditions in Rule
144(i)(2) are satisfied at the time of the proposed sale.
Any sale of shares held by the existing stockholder (after applicable
restrictions expire) may have a depressive effect on the price of our common
stock in any market that may develop, of which there can be no assurance. Our
principal shareholder does not have any plans to sell his shares at any time in
the near future.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
On July 20, 2010, the Company issued a total of 3,000,000 shares of common stock
to Mary Wolf for cash at $0.005 per share for a total of $15,000.
As of December 31, 2013, the Company has a loan of $9,161 owing to Mary Wolf,
the loan bears no interest rate, and has no term of repayment.
30
We do not currently have any conflicts of interest by or among our current
officer, director, key employee or advisors. We have not yet formulated a policy
for handling conflicts of interest; however, we intend to do so prior to hiring
any additional employees.
We do not currently have an independent director serving on the Board of
Directors.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The total fees charged to the company for audit services, including quarterly
reviews, were $7,500, audit-related services were $Nil, tax services were $Nil
and other services were $Nil during the year ended December 31, 2013.
The total fees charged to the company for audit services, including quarterly
reviews, were $5,500, audit-related services were $Nil, tax services were $Nil
and other services were $Nil during the year ended December 31, 2012.
31
PART IV
ITEM 15. EXHIBITS
The following exhibits are included with this quarterly filing. Those marked
with an asterisk and required to be filed hereunder, are incorporated by
reference and can be found in their entirety in our Registration Statement on
Form S-1, filed under SEC File Number 333-173164, at the SEC website at
www.sec.gov:
Exhibit No. Description
----------- -----------
3.1 Articles of Incorporation*
3.2 Bylaws*
31.1 Certification pursuant to Rule 13a-14(a) under the Exchange Act of
1934
31.2 Certification pursuant to Rule 13a-14(a) under the Exchange Act of
1934
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101 Interactive data files pursuant to Rule 405 of Regulation S-T
SIGNATURES
In accordance with the requirements of the Securities Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on April 8, 2014.
Redstone Literary, Inc., Registrant
By: /s/ Mary S. Wolf
------------------------------------
Mary S. Wolf, Director, President,
Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Redstone Literary, Inc., Registrant
April 8, 2014
By: /s/ Mary S. Wolf
------------------------------------
Mary S. Wolf, Director, President,
Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer
32